Thursday, December 9, 2010

As we approach the end of another year, our governments at local, state and national levels are having serious talks about balancing their budgets. It’s about time, of course. But the current seriousness of the talks has amplified calls to cut government spending and/or increase taxes.

Spending and taxes are two sides of the same coin, of course. The government has no money of its own. Government is “of the people,” and it is the taxes we pay that are the source of any funding the government has. So balancing government budgets always comes down to reductions in spending that has gone beyond the amount of taxes collected, or simply increasing taxes to provide for the increase in spending.

It sounds simple. But when you talk about raising taxes, people complain that they are taxed too much already and that government has grown too much. But proposals to cut government spending produces protests from those who would lose something they currently receive from a government program.

In the middle of this paradox is another conflict that goes beyond just a spending vs. revenue equation to consider values. You will note that government programs to provide health care, social security, food stamps, subsidies and others are called “entitlements,” implying that people who receive funding from the government are entitled or have a right to receive money from the government. But the government gets its money from other people, so some would disagree that one person who lacks something has a “right” to have it provided by others.

That’s why businesses refer to the same programs, such as health insurance, not as a right but as a “benefit.” Years ago, no one had health insurance from their employer. It was provided by some businesses as an incentive to attract and retain good employees. Over time the practice spread to the point that is not seen as an added benefit from an employer but an expected right.

But there is third way that can get us beyond the old spending vs taxes and rights vs responsibility debates. We could put more emphasis on the non-profit sector and the role of charity in society. The government and private sectors of society get the majority of our attention. But in this season of giving, the third sector, the non-profit realm, deserves emphasis and could provide answers to the debates we keep having about the role of government and the appropriate level of business taxes.

In fact, that is a more distinctly and historical American thing to do. When Alexis de Toqueville, a French political thinker and historian, toured the fledgling United States, he noted with admiration the philanthropy and charity of Americans who helped out neighbors in need. That was part of the spirit of America back in the 1800s, when the majority of the country’s residents were relatively recent arrivals from somewhere else who were trying to enjoy the freedom to make it on their own in the new country. In contrast, back in Toqueville’s Europe, people depended on a benevolent monarch or government to assist them. Toqueville himself advocated that charity as opposed to government should help the poor.

Things are more complicated today, and it would not be wise nor kind to cut all government programs that help the needy. But as idealistic compassion meets the realities of finite budgets, the role of charity is sadly lacking from economic discussions. There are numerous reasons to encourage individuals and corporations to make voluntary charitable contributions as opposed to mandatory taxation. Charity—usually encouraged by making charitable contributions tax deductible—has numerous advantages. For one, acts of charity removes some of the burden on the government. Also, charities can be more efficient and accountable than the government when it comes to administering programs. Since donations are voluntary whereas taxes are mandatory, nonprofit organizations have to work harder to ensure continued support. Donors can check up on charities on the Web site Guidestar.org to make sure funds are being used well to meet an organization’s stated mission. The government merely expects taxes, and citizens have a slim chance knowing specifically how tax dollars are used in the maze of government structure.

Charities also can get a lot of the politics out of the way of helping people. Politicians have to appropriate funding to various programs and much energy is lost debating how to divide the tax dollars. With nonprofit organizations, individual donors—not politicians--make the decision about where and how their own money can be used to help others. If you want the government to address an issue you are fond of you can write your congressperson or senator and may or may not get a response. With charities you can write a check to the causes you care about most and will get a thank you letter.

At the time I’m writing this column, there are two dominant stories in national politics. One is the report of the President’s Debt Commission with recommendations about how to reduce our ballooning annual deficit and compounded long-term national debt. The other is the 11th hour debate about whether and how to extend the lower tax rates that otherwise will expire and rise to higher levels in January. None of us can be certain how or even if the budget and tax issues will be resolved. But we all can be certain that a donation we make to a nonprofit organization will be appreciated and put to good use. Best of all, we don’t have to wait for government agreement. We can just decide, and give.